Press Releases

Ligand Prices Offering of $225 Million of Convertible Senior Notes

Company to repurchase approximately $40 million of common shares
concurrent with closing

SAN DIEGO--
Ligand Pharmaceuticals Incorporated (NASDAQ: LGND) announced the
August 12, 2014 pricing of $225 million aggregate principal amount of
0.75% convertible senior notes due 2019 in a private offering to
qualified institutional buyers pursuant to Rule 144A under the
Securities Act of 1933. Ligand intends to use the net proceeds from the
offering for corporate share repurchases, payment for certain note hedge
transactions described below and general corporate purposes. Concurrent
with the close of the transaction, Ligand expects to repurchase
approximately $40 million of stock, or approximately 700,000 shares.
Ligand has granted the initial purchasers an option to purchase up to an
additional $20 million aggregate principal amount of the notes. BofA
Merrill Lynch and Deutsche Bank Securities are acting as joint
book-running managers for the offering.

Holders of the notes will have the right to require Ligand to repurchase
all or some of their notes at 100% of their principal amount, plus any
accrued and unpaid interest, upon the occurrence of certain corporate
events. The conversion rate for the notes will initially be 13.3251
shares per $1,000 principal amount, which is equivalent to an initial
conversion price of approximately $75.05 per share of common stock, and
is subject to adjustment under the terms of the notes. The initial
conversion price of the notes represents a premium of approximately 35%
to the $55.59 per share closing price of Ligand’s common stock on August
12, 2014. The notes will pay interest semi-annually at a rate of 0.75%
per year. The sale of the notes is expected to close on August 18, 2014,
subject to customary closing conditions.

In connection with the pricing of the notes, Ligand intends to use
approximately $33.5 million of the net proceeds from the offering of the
notes to pay the cost of certain convertible note hedge transactions,
taking into account the proceeds to Ligand of certain warrant
transactions. The convertible note hedge transactions are expected
generally to reduce the potential dilution and/or offset the potential
cash payments Ligand is required to make in excess of the principal
amount upon conversion of the notes in the event that the market price
of Ligand’s common stock is greater than the strike price of the
convertible note hedge transactions, which initially corresponds to the
initial conversion price of the notes. Ligand also entered into warrant
transactions with the option counterparties. The warrant transactions
could separately have a dilutive effect if the market price of Ligand’s
common stock exceeds the strike price of the warrant transactions. The
strike price of the warrant transactions will initially be approximately
$125.08 per share, which represents a premium of 125% over the last
reported sale price of Ligand’s common stock on August 12, 2014, and is
subject to certain adjustments under the terms of the warrant
transactions.

Ligand expects to use the remainder of the net proceeds from the
offering of the notes for additional share repurchases up to a total of
$200 million inclusive of any repurchases concurrent with the
convertible transaction, which repurchases may be effected from time to
time in open-market transactions, in negotiated transactions or pursuant
to an accelerated share repurchase transaction or similar transaction,
and for other general corporate purposes. Any share repurchases by
Ligand may have the effect of increasing, or preventing a decline in,
the market price of Ligand’s common stock at the time of such
repurchases. Ligand may also use a portion of the net proceeds to
acquire new businesses through one or more strategic transactions;
however, Ligand has no current commitments or obligations with respect
to any acquisitions or strategic transactions.

The notes will be unsecured senior obligations of Ligand. The notes will
mature on August 15, 2019, unless repurchased or converted in accordance
with their terms prior to such date. Prior to May 15, 2019, the notes
will be convertible at the option of holders only upon satisfaction of
certain conditions and during certain periods. From and after May 15,
2019, the notes will be convertible without regard to those conditions
at any time until the close of business on the second scheduled trading
day immediately preceding the maturity date. Upon conversion, an amount
up to the principal amount of the notes will be paid in cash and, if
applicable, any premium above the principal amount will be paid in
common stock or cash at Ligand’s option.

Ligand has been advised by the option counterparties that in connection
with establishing their initial hedge position with respect to the
convertible note hedge transactions and warrant transactions, the option
counterparties and/or their respective affiliates expect to enter into
various derivative transactions with respect to Ligand’s common stock
concurrently with, or shortly after, the pricing of the notes. This
activity could increase (or reduce the size of any decrease in) the
market price of Ligand’s common stock or the notes.

Ligand has also been advised by the option counterparties that the
option counterparties or their respective affiliates are likely to
modify their hedge positions by entering into or unwinding various
derivative transactions with respect to Ligand’s common stock and/or
purchasing or selling Ligand’s common stock or other of Ligand’s
securities or instruments, including the notes in secondary market
transactions following the pricing of the notes and prior to the
maturity of the notes.

The notes were offered to qualified institutional buyers pursuant to
Rule 144A under the Securities Act. Neither the notes nor the shares of
common stock issuable upon conversion of the notes, if any, have been
registered under the Securities Act or the securities laws of any other
jurisdiction and they may not be offered or sold absent registration or
an applicable exemption from such registration requirements.

This press release does not constitute an offer to sell or the
solicitation of an offer to buy any notes or common stock, nor shall
there be any sale of notes or common stock in any state or jurisdiction
in which such an offer, solicitation or sale would be unlawful prior to
registration or qualification under the securities laws of any state or
any jurisdiction.

About Ligand Pharmaceuticals

Ligand is a biopharmaceutical company that develops and acquires assets
it believes will generate royalty revenues and, under its lean corporate
cost structure, produce sustainable profitability. Ligand has a diverse
asset portfolio addressing the unmet medical needs of patients for a
broad spectrum of diseases including thrombocytopenia, multiple myeloma,
diabetes, hepatitis, muscle wasting, dyslipidemia, anemia and
osteoporosis. Ligand’s Captisol platform technology is a
patent-protected, chemically modified cyclodextrin with a structure
designed to optimize the solubility and stability of drugs. Ligand has
established multiple alliances with the world's leading pharmaceutical
companies including GlaxoSmithKline, Onyx Pharmaceuticals (now a
subsidiary of Amgen Inc.), Merck, Pfizer, Baxter International,
Bristol-Myers Squibb, Celgene, Lundbeck Inc., Eli Lilly & Co., Spectrum
Pharmaceuticals and AstraZeneca.

Forward-Looking Statements

This news release contains forward-looking statements by Ligand that
involve risks and uncertainties and reflect Ligand’s judgment as of the
date of this release (including statements concerning the closing of the
offering, the use of the net proceeds from the offering and potential
share repurchases). Words such as “plans,” “believes,” “expects,”
“anticipates,” and “will,” and similar expressions, are intended to
identify forward-looking statements. These statements are based on
management’s current estimates, assumptions, expectations or beliefs and
are subject to uncertainty and changes in circumstances. These
forward-looking statements are estimates reflecting the judgment of
Ligand’s senior management and actual results may vary materially from
those expressed or implied by the forward-looking statements herein.
Ligand disclaims any intent or obligation to update these
forward-looking statements beyond the date of this release. This caution
is made under the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995.